The Human Resource: FLSA’s Impact on You

Posted by Warren Cook on May 27, 2016

Are you aware that one of the most significant Department of Labor regulations for overtime compensation have just been released and will become effective on Dec. 1? The overtime regulations were developed to adjust salary requirements for white collar exemption. It is time to become educated about your rights as an employee, or obligations as an employer.

Employees: If you are currently in a job which compensates you for any time you work beyond 40 in a scheduled work week, you are most likely not going to be impacted by the regulatory changes. You have enjoyed the protection of the FLSA — theFair Labor Standards Act — and your employer has compensated you whenever your workweek exceeded 40 hours. The overtime compensation you received was at 1.5 times your normal hourly wage, and everything is compliant.

However, if you have historically been paid on a salary basis and you were not entitled to overtime compensation, the new regulatory changes are of critical importance to understand and determine if you will be directly impacted. The new salary threshold for an employer to designate a position “exempt” under the FLSA is $47,476 annually. While it is important to note that some additional criteria impact exemption status, for those of you currently making less than this amount, your employer may no longer be permitted to classify your position as exempt, thereby making you eligible for overtime compensation at the rate of 1.5 times your hourly rate of pay for all hours worked beyond 40 in a scheduled work week. This even includes those times when you work through your lunch break, if provided one.

What does this really mean for the employee? Be prepared for communications and changes from your employer on a variety of matters such as overtime policies, work schedules, use of email and computer networks when the office is closed, and potentially rate of pay changes. Understand that your employer may be scrambling to interpret and understand the financial and business operations impact due to the regulatory changes. So please be patient, ask questions, engage your employer, and offer your support during this transition so that your employer can continue to provide their products and services to their clients or customers. Speak with the human resource department staff or leadership about any impact on you, and be proactive in learning what changes are coming in your workplace.

Employers: This is going to be a challenging time for you as you either prepare to learn and understand the regulatory changes, or you initiate your communication strategies and plans to the employees. These regulatory changes are going to force businesses of all shapes and sizes to examine their current positions and conduct thorough job analyses to determine: (1) if they have currently classified their positions in compliance with the FLSA regulations including the payment method, salary test, and duties test; and (2) if any positions presently appropriately classified as exempt will now fail the salary test due to the new limits set by the regulatory changes.

Advice for employers is to immediately begin to develop your communication strategy to the workforce to engage and demonstrate transparency as you are working towards achieving compliance. Recognize that these changes are far more reaching than just having exposure to pay overtime to some of your employees who may now be classified as non-exempt. Your business model for delivering products or services may be impacted based on restrictive work schedules, limiting access to business email systems, or figuring out how to staff your operation when overtime funds are simply not available. Ultimately, resource planning and business strategy are going to need to be examined to determine how to maximize existing resources within the confines of both the regulations and your operating budget.

New practices for tracking time worked will be uncomfortable at first. Individuals who believe being paid salary means they are “higher” level employees will experience negative feelings when reclassified. Be mindful of these feelings. Engage your workforce so the focus can remain on delivering your products and services to your customers and achieving business success.

The DoL provides various resources for employee and employer alike. These resources are prepared for small businesses and non-profit organizations so all forms of employers are informed. To access these free resources, simply go to the DoL website on this topic found here. Here you can find resource guides, fact sheets, and other information to assist you navigating these regulatory changes.

* The opinions expressed are those of the author and do not necessarily reflect those of the ownership or management of Chadds Ford Live. We welcome opposing viewpoints. Readers may comment in the comments section or they may submit a Letter to the Editor to: editor@chaddsfordlive.com

About Warren Cook

Warren is the President and co-founder of SymbianceHR and provides strategic oversight for service delivery, business operations, and technical guidance on consulting engagements. He is a human resources subject matter expert with over 25 years of experience as a strategic human resources business partner, project manager, and people leader across private and public sectors organizations. Warren is responsible for the strategic planning of all client consulting engagements from initial needs assessment and compliance review through delivery of customized strategic solutions that meet the client’s business goals. He has a proven track record of providing executive coaching and guidance to business leaders and human resource professionals at all levels including the C-Suite of Fortune 100 companies. Warren is also the Chief Talent Officer and cofounder of SymbianceHiRe, a Symbiance company dedicated to providing direct placement talent acquisition services and temporary and contract staffing solutions to the business community. Warren holds a B.S. in Human Resource Management, an MBA in Project Management, and a M.S. in Industrial and Organizational Psychology. Warren is the author of “Applicant Interview Preparation – Practical Coaching for Today.”